The United States agreed today to pay China $28 million in compensation for destroying Beijing's embassy in Belgrade during NATO's air campaign against Yugoslavia this spring.

China, in turn, agreed to pay the United States $2.87 million for damage to diplomatic buildings caused during the raucous demonstrations that erupted across China, at the government's urging, in response to the bombing.

"I hope this day marks the beginning of a more positive trend in U.S.-China relations," said David Andrews, the State Department legal adviser who has held five sets of talks since the bombing to resolve the property compensation issue. Andrews also negotiated an agreement in August to pay $4.5 million to the families of those killed and injured in the bombing.

The U.S. government maintains that the May 7 attack, which killed three Chinese and injured 27, was a "tragic accident" caused by a mind-boggling series of intelligence errors. But China's state-run media declared at the time that the bombing was an intentional act meant to keep China from its taking its rightful place in the world, and the incident caused a sharp downturn in Sino-American ties. Protesters hurled stones at the U.S. Embassy in Beijing and set fire to the residence of the U.S. consul general in the city of Chengdu.

Today's agreement was reached at 2:30 a.m., just hours after the new U.S. ambassador to China, Joseph Prueher, presented his credentials to Chinese President Jiang Zemin.

"After the tragic bombing of the Chinese Embassy in Belgrade and the aftermath here, we've gone through a lot . . . to work through the issues between our nation and China," Prueher said, adding that the two countries have "worked very long and hard" to resolve the issue of property compensation.

Still, hard feelings remain, and the Chinese government today reiterated its demand that the U.S. provide more information about what led to the "barbarous act."

A U.S. diplomat said the negotiations had taken so long because the Chinese had resisted paying compensation to the United States. Indeed, official reports did not mention that payment today. Andrews suggested the breakthrough was connected to Prueher's arrival and an interest on both sides in moving forward.

In the wake of the bombing, China has refused to restart formal dialogue on human rights, nuclear nonproliferation and military affairs, and it remained unclear how today's deal would affect those matters.

Analysts cautioned that significant issues remained.

"The bombing crystallized for the Chinese everything else that was wrong with the relationship," said Bates Gill, an expert on China at the Brookings Institute, who added that China has a "fundamental ambivalence" in the way it looks at the United States.

While Jiang believes it is in China's interest to develop strong ties with the United States, the war over Kosovo, U.S. moves toward a national missile shield and other matters have colored the view of the United States for many in China, he said.

"Increased American power, American unilateralism, and increased willingness of America to go it alone--that's really the root cause of Chinese concerns," he said.

The delivery of the U.S. funds to the Chinese is contingent on congressional approval, but a U.S. official expressed confidence that the funds will be appropriated as part of the fiscal 2001 budget.